Who Says Synergy Is a Bad Word?
By John M. Higgins -- Broadcasting & Cable, 9/7/2003 8:00:00 PM
Last spring, USA Network started pleading with NBC to let them strip Law & Order: SVU earlier than scheduled. USA had been "repurposing" the show once a week since NBC premiered it three years ago, but daily rights didn't kick in until Sept. 20. NBC listened, but had no particular reason to be generous.
|Buying VUE's studio and cable assets would double NBC's revenue base|
|Source: estimates by Sanford Bernstein's Tom Wolzien, Morgan Stanley's Richard Bilotti, Broadcasting & Cable
|* Estimated (millions)|
Then last Thursday—as NBC moved closer to an agreement to buy USA Network parent Vivendi Universal Entertainment (VUE)—NBC gave the green light. This week, USA Network starts sprinkling SVU all over its schedule two weeks early.
NBC sees the ability to make such maneuvers—small and much, much larger—as central to its proposed merger with VUE. For NBC Chairman Bob Wright and his team, there are endless opportunities for cooperation—dare we say synergy—between NBC's current entertainment assets—the No. 1 broadcast network and TV-station group and Bravo—and VUE's, which assets include USA Network, Sci Fi Channel, Trio and Universal Studios, the producer of NBC's ratings staple, the Law & Order triptych.
The success of Bravo's Queer Eye for a Straight Guy--heavily cross-promoted by and even aired on NBC--is just a taste.
Even VUE executives and managers whose jobs are in jeopardy salivate at the prospect of NBC's applying some of that muscle behind their programming. "Imagine if NBC aired a couple of episodes of Monk and really pushed it," said one Vivendi television executive. "It could get a 4 instead of a 2.5."
But success is far from certain. Despite the strength of its broadcast network and TV stations, NBC has had plenty of misfires at its other TV businesses and, in fact, controls some of the lowest-rated operations in television.
News network MSNBC has been an embarrassing ratings failure. Though still profitable, CNBC saw its ratings fizzle along with the stock market. Since NBC took control of Telemundo, Spanish-language rival Univision launched a startup network that actually beats Telemundo in the ratings. After initially feeding 30%-owned Pax TV with programming, NBC has backed off, and the network's ratings have plunged below those of many cable networks.
"VUE is in need of management. They'll get it, they'll get more than they want," said InterActive Corp. Chairman Barry Diller, who has a stake in VUE. The downside of integrating a big acquisition is "you lose focus. To the extent what you already have needs work, you're less able to pay attention to it."
Even while filled with enthusiasm about the "agreement to agree" to merge VUE with NBC, the network is perfectly aware that a deal presents as many challenges as it does opportunities.
"We think that they're great assets," said Randy Falco, group president, NBC Television Network. "We know we have a great challenge in front of us tying them together. There are cultural issues we're going to have to work out. But we feel very good about it."
VUE executives are bracing for huge changes. First, NBC sees $300 million-$375 million in "cost opportunities," which staffers pretty much interpret as "layoffs." The survivors of that process will then have to adapt to GE's bureaucratic management and financial methods.
"I feel like I've just been thrown into the California gubernatorial race," said one executive.
The big reorganization will be at the cable networks. Falco said details are far from set but describes NBC's approach as a collaborative "brand-management" structure common among consumer-products companies. A cable-network president would sit under four major groups: programming (currently controlled mostly by Jeff Zucker), affiliate sales, ad sales and promotion (The NBC Agency).
"One way to think about it is there will be a brand manager at each of the cable networks who is responsible for what goes on the air," Falco explained. "Then there are other people who support those brand managers, whether it be in promotion or sales or other disciplines."
That could be a big change for current USA Network President Doug Herzog and Sci Fi Channel President Bonnie Hammer, who currently control programming and marketing and have a lot of authority over their units. Neither would comment on the proposed transaction, but their associates said that, even if their current jobs suddenly become narrower, both see other opportunities to take higher roles in the NBC programming organization. "There's going to be a lot to run," said one friend of both executives.
Some industry executives see a danger. "There should be some individual esprit de corps at each network," says the chief of an unrelated network group. "People don't want to come into work for some conglomerate. They want to come to work for Sci Fi or Bravo." Too much integration, the executive says, could lead staffers to see their operation "as a wastebasket for NBC."
NBC executives like to point to their quick initial success with Bravo. After owning a piece of the channel for years, NBC took control from Cablevision Systems just last December. By skillfully promoting a show that was already on Bravo's slate—Queer Eye for a Straight Guy—they've more than tripled the network's Nielsen household ratings. They made heavy, heavy use of NBC's air, sending the gay makeover artists to overhaul Jay Leno, for example. "They are filled a little with 'we're cable geniuses because of Queer Eye,'" said one Vivendi executive.
But it's not a stunt NBC can repeat with every cable show on what would be four entertainment networks.
Bravo President Jeff Gaspin said Bravo carefully slated Queer Eye in a narrow, slow window. "We did [Queer Eye] in the summer, in mid July, as opposed to September or even beginning of summer, when the network is launching its summer lineup. We were very careful to take full advantage of what NBC could offer."
Still, Vivendi and NBC are tantalized by the prospect of such support and promotion to the much wider NBC audience. "I'm looking forward to getting our talent on the Today show and Leno," said one VUE television executive, "because they've sure never been willing to book them before."
No related content found.
No Top Articles
Digital Rapids provides market-leading software and hardware solutions, technology and expertise for transforming live and on-demand video to reach wider audiences on the latest viewing platforms more efficiently, more effectively and more profitably. Empowering applications from..more